No on 57: TAX THE RICH, DON'T PAY THE RICH

The Democratic Legislature and former Governor Davis "balanced"
the current year's budget by a $12 billion bond issue of
questionable legality, because it was not submitted for voter approval.
Now Republican Governor Schwarzenegger proposes to "balance"
the budget with a $15 billion bond issue, which the Legislature has
placed on the ballot as Proposition 57.

"Ahnold" recently told the Legislature that there
were only two choices: his bond plan or increasing taxes. Although the
comment was really intended to threaten and scare the Legislature into
passing his plan, in reality he had the right idea:
increase taxes on the rich, who do not pay their fair share now,
instead of issuing bonds which only pay interest to the rich at
the expense of working class Californians in future years.

The Peace and Freedom Party has traditionally opposed
bond financing because it evades fair progressive taxation and gives
taxpayer money to wealthy investors, who are the only ones who purchase
state government bonds. Interest income paid to
the wealthy is exempt from Federal income tax. This tax benefit results
in lower interest rates paid on the bonds, so that it
only makes sense for those in top tax brackets, who can take full
advantage of the tax exemption, to buy them and receive the
state tax money taken from the pockets of California workers. The
federal tax break is paid for by all workers in the U.S.
through the additional federal taxes which they must pay to make up for
this lost federal income.

The cost of government under the present system
should be paid by a genuinely progressive system of taxation. While
California has a progressive personal income tax, the overall nature of
California's tax system is highly regressive. In 2002, the poorest
one-fifth (measured by income) of California's working-age families,
with an average income of $11,100, spent an average of 11.3% of that
income on state taxes. By contrast, the wealthiest one percent, with an
average income of $1.6 million, spent an average of 7.2% of their
income on state taxes. This is primarily due to the sales tax, which is
the source of a significant portion of state revenue and which is paid
proportionatly to a far greater extent by low-income families,
notwithstanding the exemption of non-prepared food from that tax.
Likewise, low-income families pay a greater portion of their income on
property tax, either directly or through their rent.

It is true that low-income workers pay a
relatively small amount for the state's personal income tax. But this
is more than made up for by the high amounts they pay on sales and
property taxes. Further, it means that the many tax credits and
write-offs that are part of the personal income tax scheme do not
benefit them because they do not have the income tax liability that the
credits and write-offs might otherwise reduce. There are no comparable
credits for the regressive taxes paid by the lowest income workers.

Public services and infrastructure have deteriorated as government
has increasingly shifted the tax burden from corporations to workers.
Our long-range goal is a socialist society without conventional taxes,
with public services to be funded from the proceeds of social production.
We demand: